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lETlER  OF  WIVl  NELSON 
CROMWELL  TO  HON    i  VAN 
VECHTCN  OLCOTT 


THE  LIBRARY 

OF 

THE  UNIVERSITY 

OF  CALIFORNIA 

LOS  ANGELES 


LETIER 


OF 


WM.   NELSON   CROMWELL 


TO 


HON.   J.    VAN    VECHTEN   OLCOTT, 

Member  of  Congress  from  New  York, 


CONCERNING 


Panama    Canal    Matters. 


Dated  February  4,   1909. 


? 


LETTER 

OF      - 

WM.  NELSON  CEOMWELL 

TO 

HON.  J.  VAN  YECHTEN  OLCOTT, 

Member    of    Congress    from    New    York, 

CONCERNING  PANAMA  CANAL  MATTERS. 


JVeiv  York,  February  4f/>,  1909. 
.  My  Dear  Sir  : 

A  few  days  ago,  RepreseDtative  Rainey  of  Illiuois,  deliv- 
^^  ered  on  the  floor  of  the  House  an  address  coucerniuo;  Panama 
c*V^  Canal  matters  and  the  Republic  of  Panama,  slanderous  in 
'  character,  aifectiug  not  only  myself  and  other  citizens  in  pri- 
*?  vate  life,  but  the  President  of  the  Republic  of  Panama  and 
:t<.  distinguished  officials  of  the  United  States. 

Barricaded  safely  behind  the  walls  of  Congress,  Mr. 
Rainey  is  immune  under  the  Constitution  from  prosecution 
for  his  false  statements.  But  the  relations  of  the  United 
States  to  the  Panama  Canal  and  to  the  sister  Republic  of 
Panama  are  of  such  national  and  international  concern  that  I 
consider  it  my  duty  to  place  before  you,  as  a  Representative 
in  Congress  from  my  home  city,  the  facts  of  the  case  in  refuta- 
tion of  the  statements  referred  to  for  such  use  as  you  may  con- 
sider advisable. 

During  the  recent  national  election,  and  with  the  manifest 
purpose  of  injuring  the  Republican  Administration  under 
which  the  Panama  Canal  had  been  acquired,  various  malicious 
stories  concerning  the  acquisition  of  the  Panama  Canal  b}^  the 
United  States  were  offered  for  sale  to,  and  considered  by,  the 
National  Democratic  Committee  as  campaign  material,  and  were 
hawked  about  for  sale  to  various  newspapers.  Finally  certain 
newspapers  gave  them  libellous  currency,  and  it  was 
announced  in  The  New'  York  World  of  October  23,  1908, 
that  "  Under  an  agreement  reached  with  Democratic  leaders 
to-day,    Representive   Rainey    of    Illinois    wall,    on    the    first 


2 

day  of  the  session  (of  Cougress)  introduce  a  resolutiou 
calling  for  the  appointment  of  a  special  committee  to 
investigate  the  matter  "  and  Representative  Eainej  is  quoted 
as  saying  : 

"  I  am  sorry  the  President's  letter  to  Secretary  Knox  did 
not  clear  up  the  mjstery  surrounding  the  Panama  Canal 
deal.  He  ought  to  be  able  to  tell  whether  or  not  his 
brother-in-law  Douglas  Robinson  and  the  brother  of  the 
Republican  candidate  were  interested  in  the  American 
Syndicate  which  succeeded  in  getting  control  of  the 
securities  of  the  Panama  Canal  Company  just  before  the 
Nicaragua  Route  was  mysteriously  abandoned." 

The  gentleman  carried  out  this  pre-arranged  plan  and 
immediately  upon  the  opening  of  the  session  introduced  a 
resolutiou  of  inquiry-. 

The  authors  of  these  infamous  stories  are  now  under  inves- 
tigation in  the  criminal  courts  of  the  District  of  Columbia 
and  of  New  York. 

During  the  past  decade  no  subject  has  been 
more  prominently  before  the  American  public,  more 
thoroughly  investigated  and  discussed,  more  under  the 
scrutiny  of  Congress  and  the  investigations  of  its  com- 
jnittees  than  the  question  of  the  selection  of  the  Canal 
route  and  the  acquisition  and  purchase  of  the  Panama 
Canal.  It  was  to  be  anticipated  that  such  a  vast 
affair,  requiring  such  enormous  expenditures,  would  be  more 
or  less  the  subject  of  criticism,  but  every  citizen  should  be 
proud  of  the  fact  that  not  a  single  improper  charge  has  been 
substantiated  and  that  there  is  no  basis  whatever  for  criticism 
against  the  Government,  its  officials,  any  one  in  public  life  or 
any  one  in  any  way  identified  with  the  negotiations  for  the 
acquisition  of  the  CanaL  The  whole  record  is  one  of  which 
the  American  people  and  every  one  identified  with  the  subject 
matter  may  feel  sincere  pride. 


As  to  myself,  I  have  already  made,  in  an  extended  answer 
before  Congress  and  in  other  public  statements  complete 
refutation    of   these    unworthy  stories,  and    in    which   I    have 


stated,  and  ap;ain  repeat,  tli;it  not  a  dollar  of  the  $40,000,000 
l)aid  to  the  French  Companies  or  the  $10,000,000  paid  to  the 
Republic  of  Panama  was  ever  received,  directly  or  indirectly, 
by  me,  save  moderate  professional  compensation  officially 
audited  and  approved  and  a  matter  of  official  record  ;  and, 
furthermore,  that  I  never  have  had  a  penny's  interest  in  any 
business  affair  in  the  Republic  of  Panama,  save  only  a  minority 
interest  in  the  shares  of  a  local  light  company  in  the  City 
of  Panama,  which  investment  I  made  iii  cash,  at  par,  a  few 
years  ago,  upon  the  earnest  invitation  of  citizens  of  Panama  to 
encourage  a  local  enterprise,  and  which  affair  has  nothing  to 
do  with  the  United  States.  As  the  unsupported  statements 
of  the  gentlemen  from  Illinois  are  mainly  a  rehash,  in  cheap 
imitation,  of  speeches  made  by  others  and  of  the  libellous 
articles  of  the  New  York  World,  and  as  all  these  have  been 
exjoloded  as  fallacies,  it  ought  not  to  be  necessary  for  me  to 
again  expose  them,  but  I  shall  do  so  later  on  in  this  communi- 
cation. I  am  unwilling,  too,  as  counsel  of  the  Republic  of 
Panama,  to  ])ermit  the  fair  name  of  the  eminent  President  of 
that  Republic  to  be  brought  in  question,  without  ]iersoually 
bearing  testimony  to  the  facts,  and  calling  attention  to  this 
injustice  and  this  breach  of  international  propriety. 

Don  Domingo  De  Obaldia  has  lived  his  sixtj-four  years  in 
the  public  eye  of  his  country,  Colombia  and  Panama,  as  a 
gentleman  of  the  highest  accomplishments  and  refinement ; 
he  comes  of  a  family  which  for  generations  have  sat  in  the 
councils  of  their  nation  ;  and  is  universally  recognized  by  his 
countrymen  as  the  highest  type  of  personal  honor  and  political 
purity  and  patriotism.  He  is  a  very  rare  type  of  gentleman 
and  would  do  honor  to  any  country  in  the  world  and  is  uni- 
versally beloved  and  respected  by  his  people.  He  is  also  a 
sincere  admirer  of  this  nation  and  its  institutions.  It  was 
his  independence  and  patriotism  which  made  him  stand  out 
alone  as  the  only  Senator  in  th*^  Colombian  Congress  who  had 
the  courage  to  vote  in  favor  of  the  Hay-Herran  Treaty,  as  an 
open  and  courageous  advocate  of  the  interests  of  the 
Isthmus.  It  was  he  who  thrice  in  public  speeches  in 
the  Senate  at  Bogota,  in  the  course  of  that  debate, 
warned  his  fellow  countrymen  that  if  the  treaty  were  rejected 
the  Department  of  Panama  wouhl  revolt.  It  was  doubless  in 
recognition  of  his  devotion  to  the  Isthmus  and  his  lofty  char- 


acter  that  he  was  selected  as  First  Vice-President  of  the  new 
Republic,  and  that  justified  the  general  expectation  that  he 
would  be  the  natural  successor  to  President  Amador,  whose 
advanced  age  precluded  the  possibility  of  his  re-election.  It 
was  this  gentleman  wlio  was  made  Minister  at  Washington  a 
few  months  after  the  independence  of  the  Republic,  and  whom 
all  official  life  in  Washington  will  remember  for  his  charms 
of  person  and  character.  He  was  called  home  in  Ma}-,  1907, 
to  become  acting  President  during  the  six  months  vacation  of 
President  Amador,  but  in  general  expectation  of  his  succeed- 
ing to  the  Presidency.  In  this  expectation  there  was  at  that 
period  no  public  difference  and  President  Amador  himself 
openly  stated  it  at  that  time,  as  his  individual  preference  for 
his  friend  of  forty  years  intimacy.  However,  not  long  before 
the  date  fixed  for  the  national  election  another  distinguished 
citizen,  holding  the  ofiice  of  Secretary  of  State,  Mr.  Arias, 
became  a  candidate  and  questions  ai-ose  as  to  the  validity  of 
the  proceedings  upon  the  approaching  election.  Sworn  rep- 
resentatiwS^ere  made  to  Secretary  Tat't,  bj-  various  com- 
mittees, of  both  political  parties,  indicating  that  if  the  validity 
of  the  election  should  b«  brought  in  question,  public  disorder 
would  follow,  endangering  the  property  of  the  Canal  and  the  in- 
terests of  the  United  States,  as  well  as  the  peace  of  the  Republic. 
This  was  the  leason  for  the  necessarj-  consideration  of  the 
subject  by  Secretary  Taft. 

As  a  result  of  friendly  conferences  between  the  highest 
ofiicials  of  both  Governments,  a  hapj)y  solution  was  found  in 
the  proposal  by  the  Panama  Government  to  itself  establish  a 
Commission  of  Electoral  Inquiry,  and  to  invite  the  United 
States  to  have  representatives,  without  any  judicial  functions, 
accompany  that  Commission  in  its  investigations.  By  this 
means  the  crisis  was  averted  and  the  national  election  pro- 
ceeded in  an  orderl}^  manner.  Mr.  Arias,  for  reasons  of  his 
own,  withdrew  his  candidacy  on  the  eve  of  the  election,  and 
Mr.  Obaldia  was  elected. 

Protocols  for  treaties  between  the  United  States,  Panama 
and  Colombia  had  been  signed  at  Washington  in  August,  1907, 
but  in  preparing  the  treaties  certain  questions  arose  requiring 
examination  on  the  Isthmns  relating  to  bouudar}^  etc.  In 
May,  1908,  Secretary  Taft  was  going  to  the  Isthmus  upon 
Canal  matters  and  his  visit  was  availed  of  to  arrange  for  con- 


ference  upon  certain  treaty  subjects.  AccorcliDgly,  Minister 
Araiigo,  then  at  Washington,  and  myself  as  Panama  Counsel, 
proceeded  to  the  Istlimus  in  advance  of  Secretary  Taft  and 
when  he  arrived  conferences  were  held  between  him  and  tlie 
American  Minister  on  the  one  part  and  the  officials  of  the  Re- 
public of  Panama  and  myself  on  the  <jther,  concerning  certain 
treat}-  subjects.  It  was  while  there  on  this  treaty  mission  and 
without  any  anticipation  in  advance,  that  the  question  of  the 
national  election  arose,  and  was  happily  solved,  as  I  have 
stated. 

It  is  apparent,  therefore,  that  President  Obaldia  was  not 
forced  upon  the  people  of  Panama  by  this  Government  or  by 
any  other  agency  ;  and  that  he  was  the  free  choice  of  his 
conntrymen  ;  that  the  action  of  Secretary  Taft  was  states- 
manlike, prudent,  friendly  and  greatly  beneficial  to  both  coun- 
tries ;  and  that  any  statement  to  the  conti'ary  by  whomsoever 
made,  on  or  off  the  floor  of  the  House,  is  unqualifiedly  false 
and  unwarranted. 

To  give  some  color  of  truth  to  his  remarks,  the  gentle- 
man from  Illinois  states  that  President  Obaldia  and  I  have 
been  closely  identified  with  each  other  for  ten  years  past.  I  wish 
to  sa}^  that  it  would  have  been  an  added  pleasure  if  I  had 
known  him  that  long,  but  this  statement,  like  the  others,  is 
untrue.  I  never  had  the  honor  of  President  Obaldia's  ac- 
quaintance, or  any  communication  of  any  kind  wath  him,  either 
while  he  was  at  Bogota  or  on  the  Isthmus,  either  before  the 
Independence  or  after  it,  until  lie  came  to  Washington  as  the 
Minister  of  that  Republic  in  June,  11)04. 

Of  the  gross  impropriety  and  international  discourtesy  of 
statements  upon  the  floor  of  Congress  affecting  the  esteem 
of  the  people  of  the  United  States  for  the  Chief  Magistrate  of 
a  sister  Republic,  and  the  confidence  of  the  people  of  that 
country  in  the  Government  of  this  country,  no  American 
citizen  can  have  any  doubt,  and  when  beside,  such  allega- 
tions have  no  foundation  in  fact,  no  w^ords  of  condemnation  of 
such  conduct  can  be  too  severe.  And  further  wdien  that  sister 
Republic  is  the  grantor  of  the  concessions  under  which  the 
Canal  is  being  constructed,  and  when  that  great  highway  lies 
in  the  territory  of  that  sister  Republic  and  to  an  important 
degree  under  its  protection,  the  offense  becomes  a  direct  injury 
a,nd  peril  to  the  property  and  interests  of  the  United  States,  as 


6 

calculated  to  impair  the  confidence  of  the  people  of  that  Ee- 
piiblic  iu  the  friendship  and  good  will  of  our  people.  I  have 
frequently  stated  that  in  my  judgment  the  good  will,  friend- 
ship and  support  of  the  Kepublic  of  Panama  is  the  best  guar- 
anty of  the  safety  and  protection  of  the  Canal.  The  continua- 
tion of  such  good-will  and  friendship  is  of  paramount  import- 
ance to  this  country,  and  anyone  who  Avillfully  does  anything 
calculated  to  impair  it  becomes  a  public  enemy. 


II. 

Keferring  to  the  statement  made  upon  the  floor  of  the 
House  that;  the  Republic  of  Panam?  is  entertaining  proposi- 
tions for  the  construction  of  a  railroad  within  its  territory,  and 
the  sale  of  timber  from  public  lands,  it  is  proper  to  say  that 
these  sul)jects  are  exclusively  within  the  business  and  juris- 
diction of  the  Republic  of  Panama  and  are  not  the  subject  of 
action  by  the  Congress  of  any  other  nation.  The  Republic 
of  Panania  is  fully  competent,  acting  through  its  Executive 
and  through  its  own  Congress,  to  deal  with  such  affairs  which 
concern  itself  alone.  The  consideration  of  the  Congress  of  any 
other  country  of  any  such  questions  local  to  Panama,  is  not 
justified  by  any  principle  of  international  law  or  any  rule  of 
international  courtesy  or  ethics  ;  but  for  the  information  of 
yourself  and  my  fellow  citizens,  I  wish  to  declare  that  I  have 
not  and  never  have  had,  any  interest  or  participation,  directly 
or  indirectly,  in  either  of  the  propositions  referred  fo,  nor  am 
I  professionally  or  in  any  wa}^  a  party  to  or  interested  in 
either  of  the  proposed  affairs  and  have  taken  no  part  in  them  ; 
and  to  make  this  a  matter  of  unquestionable  knowledge  on  the 
Isthmus  I  forwarded  the  following  cable  to  President  Obaldia  : 

"  New  York,  Jan.  29,  1909. 
President  Obaldia, 

Presidencia,  Panama. 
In  view  of  statements  made  in  Congress  by  Represen- 
tative Rainey  of  Illinois  respecting  railroad  and  timber  propo- 
sitions recently  under  consideration  by  the  Panama  Govern- 
ment and  Legislature,  I  beg  leave  to  state  that  I  am  not  and 
never  have  been  iu  any  manner  directly  or  indirectly,  presently 
or  prospectively  interested  iu  eitlier  of  the  proposed  affairs  or 


auy  other  railroad   or    timber   proposition    whatsoever  in   the 
Republic  of  Panama. 

Please   do   me   the   favor   to  give  this  statement  the  fullest 
pul)licity. 

Wm.  Nelsox  Cromwell." 

It  was  i)ublished  at  Panama. 

I  do  not  wish  to  be  understood  as  in  any  way  dealing  with 
the  merits  of  these  subjects  concerning  which,  moreover,  I 
have  no  information  or  knowledge  of  any  kind,  one  way  or  the 
other.  But  the  gentleman  from  Illinois  bases  his  unwarranted 
introduction  of  my  name  (and  those  of  others)  in  ccmnection 
with  said  railroad  and  timber  propositions,  upon  alleged  state- 
ments by  Mr.  John  Elirman  (a  well  known  banker  of  Panama) 
or  of  President  Obaldia,  at  a  certain  conference  at  the  Palace 
on  the  night  of  December  27,  1907.  The  gentleman  makes  the 
following  specific  statement  in  his  speech  of  January  26. 

"  On  Sunday  night,  the  27th  day  of  December,  Obaldia 
called  to  his  pahxce  certain  members  of  the  General  Assembly, 
and  they  then  and  at  that  time  time  demanded  of  him  to  know 
who  the  men  were  back  of  John  Ehrman,  representing  that 
John  Elirman  had  no  particular  financial  standing  ;  and  at  that 
time  they  were  told  that  the  men  who  were  back  of  this  in- 
famous, outrageous  scheme  were  William  Nelson  Cromwell, 
Eoger  L.  Farnharn,  his  confidential  clerk,  W.  S.  Harvey,  and 
Charles  P.  Taft." 

He  regards  this  as  a  vital  and  conclusive  point  in  the  case 
he  manufactures  by  again  repeating  it  word  for  word  on  the 
floor  of  the  House,  on  the  29th  of  February,  as  well  as  in  his 
interviews  in  the  press. 

I  shall  show  in  a  moment  that  this  is  a  complete  fabrica- 
tion, unworthy  of  any  member  of  such  a  distinguished  body. 

This  is  made  out  of  whole  cloth  and  is  false. 

The  conference  in  question  was  participated  in  by  the 
President,  his  Cabinet  and  seventeen  members  of  the  Assem- 
bly. I  present  the  following  cables  from  every  gentleman 
present  at  that  conference,  and  also  one  from  Mr.  John 
Ehrman,  which  shows 

First.  That  Mr.  John  Ehrman  was  not  present  at  all  at  said 
conference  and  consequently  did  not  make  the  statement  quoted. 

Second.  That  no  American  or  other  outsider  was  present  at 
the  conference. 


8 

Third.  That  at  said  conference  no  mention  was  ever  made 
by  the  President  or  any  other  person  of  the  names  of  myself 
and  the  other  gentlemen  mentioned. 

Fourth.  That  Mr.  Ehrmau  himself  specifically  declares 
that  not  only  did  he  not  make  the  statement  quoted  by  Mr. 
Eainey,  but  that  in  fact  myself  and  the  others  named  were  not 
connected  with  the  parties  interested  with  him  in  the  affair. 

The  cables  are  as  follows  : 

Panama,  January  31,  1909. 

Manuel  Obaldia, 

Hotel  Latham,  N.  Y. 

I  was  not  present  at  conference  at  Presidencia  December 
27th  therefore  have  never  made  statement  to  Diputados  re- 
lating to  parties  interested  in  timber  proposition  who  have  no 
conuection  with  Charles  Taft,  Cromwell  or  Faruham.  So  I 
have  never  mentioned  them  to  anybod}-. 

(John)  Juan  Ehrman. 

Jany.  31,  1909. 

Manuel  OBALorA, 

Hotel  Latham,  N.  Y. 

My  attitude  while  in  Colombian  Congress  in  1903  and  my 
entire  public  life  are  far  beyond  the  reach  of  slanderers. 

Amador  Arias  government  was  not  overthrown  but  after 
expiration  of  constitutional  term  was  defeated  in  free  elections 
Avhich  freedom  of  suflfrage  was  due  to  the  presence  of  the 
Americans  at  polls  specially  invited  to  do  so  by  Amador  Arias 
government  as  it  is  shown  by  official  communication  published 
and  in  accordance  with  article  136  of  Panamanian  constitution. 

At  conference  at  Presidencia  December  27th  were  present 
the  members  of  the  cabinet  and  seventeen  diputados.  Neither 
Ehru)an  nor  any  other  outsider  was  present  and  no  mention 
was  ever  made  by  me  or  by  any  other  person  of  Charles  Taft, 
Cromwell  or  Farnham  in  regard  to  timber  proposition  which 
was  brought  betore  them  for  consideration.  Railway  proposi- 
tion presented  by  Ward  to  assembly  was  considered  and  rejected. 
Assembly  passed  a  law  authorizing  to  construct  railroads  with 
public  funds  said  roads  to  be  national  property. 

Timber  contract  with  Ehrman  was  rejected  by  Assembly 
and  there  is  a  bill  under  consideration  regulating  forest  exploi- 
tation on  the  Atlantic  Coast  between  Eive  Concepcion  and 
Costa  Rica  including  the  entire  Chagres  valley. 

(President)     Obaldia. 


Panama,  February,  1,  1909. 

Manuel  Obaldia, 

Hotel  Latham. 

We,  the  nudersigued,  Diputados  to  the  National  Assembly 
of  Panama,  declare  that  we  were  present  at  the  conference  that 
took  place  at  the  Presidencia  on  the  27th  of  December  last  and 
affirm  that  in  said  conference  neither  President  Obaldia  nor 
anybody  else  stated  that  Messrs.  Taft,  Cromwell  or  Farnham 
had  any  interest  or  participation  in  the  timber  aifair  proposed 
to  the  Government  of  the  Republic. 

(Signed) 

Pablo  Aeosemena 

Julio  J.  Fabrega 

Hector  Conte  B 

Corll\no  Guardia 

Antonio  Burgos,    (President  of 

Assembly) 
R.  AizpURU 
S.  Sucre 

GoNZALo  Santos  K 
Isaac  Delgado 
Jose  D.  Guardia 
Jose  E.  Lefevre 
E.  A.  Morales 
Demetrio  Dutaey 
Jeronimo  Garcia 
Simon  Esquivel 
Jose  M.  Sotomayer 
Ignacio  Quinzada 

This  disposes  of  the  personal  question. 

But  it  also  is  shown  how  the  Railway  and  Timber  jDroposi- 
tions  were  in  fact  dealt  with  by  the  Panamanian  Congress. 

1st.  That  Mr.  Ward's  railroad  proposition  was  rejected  by 
Congress  and  that  Oongress  passed  a  law  for  the  construction 
of  a  raih'oad  as  Government  property. 

2nd.  That  Mr.  Ehrman's  timber  proposition  was  rejected 
by  Congress  and  that  Congress  has  under  consideration  a  bill 
regulating  forest  exploitation  in  the  national  interest 

Thus  not  only  is  the  gentleman  from  Illinois  convicted  of 
making  statements  which  are  uutrue  in  fact,  but  it  is  clearly 
shown  how  conservatively  the  Nation  has  acted. 


10 


III. 


lusinuations  made  against  the  financial  integrity  and 
metiiods  of  the  Republic  of  Panama  are  made  by  the 
geotleman  referred  to. 

I  remind  ^-on  that  by  Article  138  of  the  Constitution  of 
Panama,  it  is  provided  that  : 

"  In  order  to  guarantee  to  posterity  a  part  of  the  pecuniary 
benefits  derived  from  the  negotiation  for  the  opening  of  the  in- 
teroceanic  canal,  the  sum  of  six  million  dolhirs  is  to  be  reserved 
which  wj]]  be  inverted  into  securities  producing  a  fixed  annual 
revenue.     The  law  will  regulate  this  inversion." 

I  presented  to  the  Senate  Committee  in  February.  1906,  a 
detailed  memorandum  showing  the  investment  and  disposition 
of  the  entile  .$10,000,000  paid  by  the  United  States  to  the  Re- 
public of  Panama,  and  I  am  glad  of  the  opportunity  to  state 
that  the  investment  of  .$6,000,000  in  first  mortgages  upon  high 
class  improved  property  in  the  City  of  New  York,  remains 
intact.  All  these  funds  are  caied  for  and  safe-guarded  in  the 
most  scrupulous  manner,  and  there  is  now  thus  invested  and 
on  deposit  in  the  Trust  Companies  in  New  York  City,  at  inter- 
est, the  aggregate  sum  of  $7,249,014.23,  in  addition  to  its  cash 
in  Panama.  Every  dollar  of  this  stands  in  the  name  of  the 
Republic  of  Panama.  No  disbursements  are  made  from  these 
funds  without  the  direct  order  of  the  Government  of  Panama. 
The  accounting  betw^eeu  New  York  and  the  Repuolic  of  Pan- 
ama is  systematic  and  perfect,  and  the  disbursement  of  every 
dollar  of  these  funds  is  published  at  regular  and  frequent  inter- 
vals by  the  Minister  of  Finance  of  the  Government  of  Panama 
in  the  Official  Gazette,  and  is  thus  made  known  to  all  the 
citizens  of  that  countrj'. 

The  management  of  the  Panama  Government  is  prudent 
and  the  ]}ational  funds  are  zealously  guarded.  It  is  proud  of 
the  position  which  it  occupies  at  being  perhaps  the  only  civil- 
ized country  which  has  not  a  dollar  of  debt  and  which  has  a 
substantial  cash  reserve.  It  has  also  placed  itself  upon  a  gold 
basis  by  voluntarily  creating  a  cash  fund  now  on  deposit  with 
the  trust  companies  of  the  City  of  New  York,  in  the  name  of 
the  Republic,  representing  the  difierence  in  value  betw^een  the 


11 

silver  currency  and  the  ^okl  coin.  No  people  could  manifest 
naore  clearly  their  high  standard  of  financial  honor  and  their 
worthy  ambition  to  be  ranked  among  the  best  of  the  world. 
The  young  republic  is  worthy  the  respect,  confidence  and 
praise  of  their  American  brethren,  and  improper  insinuations 
against  its  conduct  on  the  floor  of  the  House  are  not  only  im- 
proper as  a  matter  of  international  courtesy,  but  grossly  false 
in  fact. 

IV. 

The  pendii'g  treaties  between  Panama,  Colombia  and  the 
United  States  have  been  referred  to  as  furthering  in  some 
mysterious  way  an  improper  purpose.  As  counsel  for 
the  Republic  of  Panama,  permit  me  to  say  that 
after  the  independence  four  fundamental  questions 
remained  for  adjustment  between  Panama  and  Colombia, 
as  is  usual  in  cases  of  separation  of  territory  ; 
as  was  the  case  between  United  States  and  Great  Britain,  be- 
tween Colombia  and  other  South  American  Rejjublics  sep- 
arated from  Spain,  and  many  other  well  known  instances. 
These  involved  the  establishment  of  the  precise  boundary  be- 
tween Panama  and  Colombia  ;  the  ascertainment  of  the  pro- 
portion of  the  foreign  debt  of  Colombia  which  should  be 
borne  by  the  separating  republic  and  the  adjustment  of  other 
pecuniary  relations  ;  commercial,  extradition,  postal  arbitra- 
tion and  other  relations,  as  well  as  the  formal  recognition  by 
Colombia,  itself,  of  the  Independence  of  Panama  as  had  been 
done  by  all  other  civilized  nations.  The  United  States,  was 
of  course,  deeply  concerned  in  promoting  these  ends  and  by 
request  of  Colombia  and  Panama  lent  its  good  offices  as 
mediator.  These  negotiations  were,  with  much  vicissitude, 
pursued  for  over  two  years,  when,  on  August  17,  1907,  proto- 
cols for  treaties  were  formally  signed  at  Washington.  But 
fresh  differences  arose  in  the  preparation  of  the  treaties  them- 
selves and  it  was  only  on  the  9th  day  of  January,  1909,  com- 
plete accord  was  reached  and  the  treaties  were  signed. 

This  happy  result  is  one  of  portentious  significance  in 
United  States  and  South  American  affairs.  It  re-establishes 
cordial  diplomatic  and  commercial  relations  ;  it  determines 
vexatious  questions  of  boundary  lines  and  pecuniary  obliga- 


12 

tious  ;  and  furuishes  to  all  South  America  a  practical  illustra- 
tion of  the  fraternal  attitude  and  friendly  disposition  of  the 
United  States. 

When  the  Hay-Herran  Tieaty  was  pending  before  the 
Colombian  Congress  in  1903  and  when  that  Government 
demanded  of  my  French  clients  the  equivalent  of  $20,000,000 
in  cash  as  the  price  of  its  consent  to  the  sale  of  the  Company's 
property  to  the  United  States,  it  was  my  duty  to  oppose  that 
demand,  and  I  did  so  ;  but  since  the  Independence  I  have  been 
earnestly  devoted  to  the  establishment  between  Panama  and 
Colombia  of  the  relations  embodied  in  these  treaties. 

It  is  this  beneficent  result  which  constitutes  to  the  mind  of 
the  member  from  Illinois  an  inscrutible  and  unfathomable 
depth  of  mystery  and  mischief. 


V. 

iVlthough  the  jiurchase  of  the  Panama  Canal  properties  was 
fully  and  satisfactorily  concluded  in  May,  1904,  and  although 
every  step  has  been  reported  to  Congress,  the  heat  of  party 
conflict  in  the  recent  national  campaign  induced  the  publica- 
tion of  the  false  stories  to  wliicli  I  first  alluded  concerning  the 
_  j)^^i'chase  of  the  Canal.  I  made  this  the  subject  of  an  explicit 
]3ublic  statement  on  December  11,  1908,  which  was  transmitted 
by  the  President  to  Congress  in  connection  with  his  message 
on  December  15,  1908.  Permit  me  emphatically  to  reiterate 
every  statement  by  me  therein  made,  and  for  that  purpose  I  at- 
tach a  copy  hereto.  There  is  no  obscurity  or  uncertainty 
about  any  aspect  of  the  Canal  purchase.  The  indubitable 
records  exist  and  are  open  to  all  who  are  entitled  to  see  them. 

You  are  aware  that  prior  to  1899  the  peoi:)le  of  the  United 
States  had  not  given  the  Panama  Canal  serious  consideration, 
although  work  upon  it  was  steadily  progressing  by  the  French 
Company,  with  several  thousand  laborers.  But  in  March  of 
that  year  Congress  created  a  new  Commission  (the  Walker  Com- 
mission) and  then  for  the  first  time  an  examination  was  made 
of  the  Panama  Route  and  the  concessions,  work,  plant  and 
other  affairs  of  the  Panama  Canal  and  railroad.  This  exam- 
ination was  made  during  six  weeks  daily  sessions  in 
Paris   by   the  Commission   as  a   body,  and  subsequently  by 


13 

many    moiatlis    exauiinntiou    on    the    Tstlniuis    with     a     corps 
of     eiigiueei'S.       I    can    state    without    fear    of    contradiction 
that  the  menjbers   of  the  Commission  were  greatly  sur])rised 
and    most     favorably    impressed    with     the    result    of     their 
investigations  and   the  superiority  of  the  Panama  Route  over 
that  of  Nicaragua,  which  had  theretofore  been  popularly  con- 
sidered the  preferable  one.     No  unprejudiced  person  can  read 
the  Commission's  reports  and  the  subsequent  testimony  of  its 
members  before   the  Committees    of    the    Senate   and   House 
without   being    satisfied    that   the    Commission    were    of   this 
opinion.     But  the  law  under  Avhich   they  acted  required  them 
to  recommend  the  route  "  most  practical)le  and  feasible  "  and 
which  could  be  "  under  the  control,  management  and  owner- 
ship of  the  United  States."     This  included,  therefore,  not  only 
technical  superiority  and  feasibility,  1)ut  also  the  practicability 
of  the  United  States   controlhng,  managing  and   owning   the 
same.     In  other  words,  that  while  the  Panama  Route  might  be 
the  superior  and  "feasible"  route   from  a    technical    stand- 
point, it  would  not  be  a  practicable  one   for   the   purposes  of 
the  United  States,  if  it  could  not  be  acquired    upon   satisfac- 
tory terms  and  ])laced  under  the  "  control,  management  and 
ownership  of  the  United  States  "  ;  and  that  therefore  the  two 
elements,   fecmhility  and  practicability,  must  co-exist. 

For  this  reason,  as  their  reports  state,  the  Commission 
requested  the  Panama  Canal  Company,  in  September,  1899,  to 
state  the  price  and  terms  upon  which  it  would  sell  the  Canal 
properties  in  case  the  United  States  should  adopt  the  Panama 
Route. 

The  French  Company,  while  furnishing  every  facility  in 
France  and  upon  the  Isthmus  for  the  most  minute  inspection 
of  its  plans  and  work  was  reluctant  to  sell  upon  any  terms,  or 
to  abandon  the  completion  of  the  Canal  as  a  French  enter- 
prise. The  correspondence  reported  to  Congress  by  the  Com- 
mission shows  a  series  of  letters  upon  the  part  of  the  Commis- 
sion addressed  to  the  Panama  Canal  Company  urging  a  reply 
to  the  request  that  the  Company  declare  whether  it  was  will- 
ing at  all  to  sell,  and  if  so  the  price  at  which  it  would  sell.  For 
more  than  a  year  and  a  half  the  Company  steadily  refrained 
from  making  any  definite  rejDly  to  this  request.  The  Company 
sent  to  this  country  its  President,  who  thereafter  personally 
conducted  the  conferences  with  the  Commission  and  furnished 


14 

appraisements  and  valuations  of  $109,000,000  as  a  basis  for 
discussion.  Finall}',  in  November,  1901,  the  Commission  an- 
nouncing that  it  was  unable  to  procure  a  definite  offer  from  the 
French  Company,  closed  the  debate  by  re-making  a  report 
(November  16,  1901)  in  favor  of  the  Nicaragua  Route,  upon 
the  ground  that  it  was  not  "  practicable  "  to  acquire  from  the 
French  Company  the  Panama  Canal  and  bring  it  under  the 
"  control,  management  and  ownership  of  the  United  States,' 
and  they  set  forth  the  voluminous  correspondence  with  the  , 
President  of  the  Comj)any  describing  their  efforts  in  that 
regard. 

Upon  Page  103  of  their  report  the  Commission  fixed  the 
sum  of%Jf.O,000,000  as  the  value  to  the  United  States  of  the 
Panama  Cnmpanijs  properties  (including  about  98%  of  the 
Railroad  shares)  as  it  then  stood,  giving  the  items  thereof  in 
detail,  but  taking  no  account  of  the  valuable  concessions 
owned  by  the  Company  and  which  cost  the  Company  alto- 
gether over  $3,000,000,  nor  the  vast  amount  of  locomotives, 
cars,  tools,  machinery,  supplies,  dredges  and  other  plant 
which  cost  many  millions  of  dollars  and  considerable  of  which 
has  since  been  utilized  by  the  United  States. 

At  this  point  I  call  attention  to  another  misstatement  of 
the  gentleman  from  Illinois.  He  says  that  when  the  Colombian 
Congress  was  demanding  from  the  Canal  Company  some  por- 
tion of  the  $40,000,000,  the  franchise  granted  to  the  Canal 
Company  expired  in  less  than  a  year  and  at  that  time  the 
entire  French  holdings  on  the  Isthmus  would  be  forfeited  to 
Colombia.  This,  too,  is  false.  The  Canal  franchises  had  at 
that  time  (October,  1903)  still  seven  years  to  run  (Oct.  31, 
1910)  and  the  Railroad  Concessions  had  sixty-six  years  to 
run  (1969). 

In  view  of  the  Commission's  report  recommending  the 
Nicaragua  Route  and  the  state  of  legislation  in  Congress,  the 
Panama  Company  cabled  to  the  Commission  on  January  4,. 
1902  (confirmed  January  9,  1902)  as  follows  : 

u  *  *  *  The  Company  declares  itself  ready  to  transfer 
to  the  Government  of  the  United  States  on  payment  of  forty 
million  dollars  its  properties  and  concessions  estimated  at  that 
amount  by  the  Isthmian  Canal  Commission  in  its  last  Report, 
Page  103,  in  conformity  with  the  terms  and  conditions  of  said 
Report." 


1 


ft 


The  reference  to  \yv^e  103  of  the  ('oiiiuiission's  Report  was 
the  vahiation  of  $40,000,000  vin//e  by  the  Cointnission.  Upon 
demand  of  the  United  States,  the  Com[)aiiy  by  cable  of  Janu- 
ary 11,  1902  also  included  in  the  sale  "all  maps  and  archives 
in  Paris."  It  is  manifest,  therefore,  first,  that  the  Frencii  Com- 
pany was  reluctant  to  surrender  the  completion  by  itscdf  of  the 
Canal  enterprise  and  had  resisted  h)r  over  a  year  and  a  half 
the  efforts  of  the  Commission  to  procure  au  offer  of  sale  ; 
second,  that  it  finally  made  the  sale  under  pressure  of  the 
circumstances  referred  to  ;  and  third,  that  the  price  was  fixed 
not  by  the  French  Ci>iapnn]i  but  by  the  Government  of  the  United 
States  in  the  Commission's  report  referred  to. 

I  make  this  rehearsal  of  the  records  of  the  ease  to  refute 
the  loose  and  unwarranted  statements  that  the  Frencli  com- 
panies in  any  sense  imposed  a  price  upon  the  United  States  ; 
and  also  to  make  it  clear  that  the  price  was  fixed  by  the 
United  States  itself  and  included  millions  of  dollars  of  prop- 
erly in  addition  to  that  valued  in  the  appraisal  made  by  the 
United  States.  As,  at  last,  an  offer  had  been  procured  by 
them  from  the  French  Company,  the  Commission  promptly  re- 
convened and  by  their  further  report  of  January  19,  1902, 
recommended  the  acceptance  of  the  offer,  and  subsequently, 
Congress,  after  exhaustive  debate,  adopted  the  so-called 
SpoonerBill  on  June  28th,  1902,  authoriziuj^  the  consummation 
of  the  purchase  under  conditions  of  an  approved  title  and  a 
satisfactory  treat}'  with  the  sovereign  of    the  territory. 

The  transaction  was  concluded  and  the  sale  consum- 
mated May  10,  1904,  and  payment  made  to  the  liquidators  of 
the  two  French  companies  direccly  from  the  Treasury 
of  the  United  States  into  the  Bank  of  France, 
through  Messrs.  J.  P.  Morgan  k  Company  as 
fiscal  agents  of  the  United  States.  The  expense 
of  the  transmission  of  the  fund  from  the  United  States  to 
France  was  borne  by  my  clients,  the  Frencli  Company. 
Messrs.  Morgan  k  Company  received  compensation  measured 
by  the  difference  in  exchange,  of  about  $35,000  only,  in  res])ect 
of  the  $40,000,000  gold  transmitted.  No  part  of  this  expense 
was  borne  by  the  United  States.  The  receipts  of  the  Liqui- 
dators of  the  old  company  and  of  the  Panama  Canal  Company 
for  the  entire  sum  of  140,000,000  are  on  tile  in  the  Treasury  of 
the  United  States  and  show,  as  any  citizen  can  see,  that  the 


16 

$40,000,000  was  paid  directly  into  the  Bauk  of  France  to  the 
credit  of  the  Liquidators  of  the  old  and  the  new  French  Com- 
panies, in  the  proportions  approved  by  the  French  Tribunal. 

In  my  public  statement  of  December  11  last,  above  referred 
to,  I  explained  how  this  sum  of  $40,000,000  was  distributed 
by  the  Liquidators  to  the  beneficiaries  of  each  company,  and 
I  also  stated,  as  I  now  repeat,  that  there  was  no  American 
syndicate  which  ^had  previously  acquired  the  Canal  and  then 
sold  to  the  United  States  and  that  the  whole  story  to  that  effect 
was  a  falsehood  and  concoction. 


VL 

Now  a  word  as  to  the  account  for  additional  construction 
work  performed  by  the  French  Company  : 

BetAveen  the  date  of  the  appraisal  by  the  Commission  and 
the  date  of  the  closing  of  the  transaction  (April  1900-May 
1904),  the  French  Company  continued  the  work  upon  the 
Isthmus  with  a  \iivs[,e  force  of  engineers  and  employees,  and 
actually  expended  thereon  the  additional  sum  of  $'2,251,808.47. 

After  the  oflfer  of  sale  the  daily  execution  of  this  work  upon 
the  Isthmus  was,  by  direction  of  the  President,  supervised,  in- 
spected and  reported  upon  by  United  States  engineers  especi- 
ally delegated  for  that  purpose,  so  that  the  account  thereof 
was  contemporaneously  examined  as  the  work  progressed. 

During  this  period  and  before  closing  the  purchase,  the 
Company  communicated  to  the  United  States  its  expectation 
that  re-imbursement  for  such  additional  actual  cash  outlay 
would  be  made  as  part  of  the  purchase  and  as  a  part  of  the 
concluding  details  of  the  transfer.  The  subject  of  this  addi- 
tional construction  work  was  accordingly  (and  as  a  part  of  the 
closing  of  title  by  written  agreement)  referred  to  President 
Boosevelt,  as  sole  arbitrator,  w^ith  the  understanding  that  his 
decision  should  be  conclusive. 

Through  the  Attorney  General  the  duty^  of  examining  into 
and  reporting  upon  the  facts  was  delegated  to  the  Commission, 
reserving  to  the  Attorney  General  the  questions  of  law.  The 
Commission  performed  its  duty  and  reported  that  the  amount 
had,  in  fact,  been  actually  so  expended.  Subsequently,  as  sole 
arbitrator,  the  President  rendered  a  decision  to  the  effect  that 


17 

he  considered  tliat  the  purchase  price  of  $40,000,000  should 
embrace  the  additional  expenditures.  There  was  at  no  time 
anj'  question  as  to  tlie  fact  of  the  expenditures  and  as  to  the 
amount  thereof,  nor  as  to  the  fact  that  the  United  States  re- 
ceived the  benefit  of  it.  It  is  manifest,  therefore,  that  the 
presentation  of  this  claim  by  the  French  Company  was  war- 
ranted b}'  the  conditions  and  was  a  part  of  the  transaction, 
while  conclusively  adversel}'  disposed  of  by  the  decision  of  the 
agreed  arbitrator. 

Thus  the  United  States  received  this  additional  work  cost- 
ing the  French  Company  $2,251,808.47,  as  a  part  of  the 
$40,000,000  purchase.  To  characterize  this  account  for  further 
construction  work  as  fraudulent  is,  therefore,  a  manifest 
wrong  to  the  Freneh  Company  and  only  aggravates  their  sense 
of  loss. 

During  the  pendency  of  the  offer,  also,  the  Panama  Rail- 
road Company  continued  in  opeiation  under  control  of  the 
French  Company,  and  under  the  circumstances  of  the  case,  it 
was  legally  entitled  to  the  net  earnings  of  operation.  This  right 
was  unquestioned.  The  management  of  the  Kaih'oad  Company 
was  otficially  passed  upon  in  behalf  of  the  Government  by  a 
sub-committee  of  the  Interstate  and  Foreign  Commerce  Com- 
mittee of  the  House,  appointed  under  lesolution  approved  by 
the  House,  January  12,  1905,  and  which,  after  investigation 
at  New  York  and  in  Washington  of  the  affairs,  earnings  and 
condition  of  the  Panama  Railroad  Company,  rendered  its 
unanimous  report  to  the  House,  which,  among  other  things, 
stated  : 

"  The  testimony  shows  that  the  management  by  the  officers 
and  directors  of  the  Panama  Railroad  has  been  conspicuously 
able,  progressive  and  business-like." 

Further,  an  exhaustive  report  by  the  Secretary  of  War  to 
the  Committee  on  Interoceanic  Canals  of  the  Senate  on  the  28th 
of  June,  1906,  especially  dealt  with  and  disposed  of  the  subject 
of  dividends.  In  that  report,  presenting  exhaustive  analyses 
of  accounts,  he  stated  : 

"  The  figures  show,  therefore,  that  instead  of  the  Panama 
Canal  Company,  as  a  stockholder  in  the  Railroad  Company, 
depriving  the  United  States,  as  its  transferee  of  stock,  of  the 
benefit  to  it,  of  assets  of  the  Company  by  the  declaration  and 
payment  of  dividends  in  excess  of  net  earnings,  there  was  left 


18 

in    the  Treasury   of   the    Compauj  $109,344.36  of    undivided 
profits." 

Not  oulv  were  the  French  companies  entitled  to  the  net 
earnings  for  the  reasons  stated,  but  by  other  considerations  as 
well.  Ill  tlie  first  place,  no  interest  was  allowed  to  them  upon 
the  purchase  price  of  $40,000,000  between  the  date  of  the  offer 
(Januarv,  1902)  and  the  transfer  to  the  United  States  (May, 
1904),  which,  at  the  rate  of  four  per  cent.,  would  have 
amounted  to  over  $3,200,000,  as  against  dividends  of  less  than 
$1,000,000;  and  second,  the}'  expended  (as  it  turned  out) 
$2,251,808.47,  several  hundred  thousand  dollars  of  which  were 
actually  expended  between  January,  1902  and  May,  1904,  and 
for  which,  through  the  decision  of  the  President,  it  received  no 
additional  allowance. 

Every  account  aud  transaction  of  the  Railroad  Company 
was  audited  and  approved  by  the  Governmeut  officials  after 
full  examination. 

This  l)riugs  me  to  state  a  consideration  of  great  moment  to 
this  Couutiy,  and  that  is  that  both  the  Panama  Canal 
and  the  Panama  Railroad  were  turned  over  to  the  United 
States  well  equipped,  well  managed,  in  active  operation,  and 
with  a  symi^athetic  aud  energetic  force  that  enabled  the 
great  work  to  go  on  through  both  branches  of  that  service 
without  interruption  from  the  moment  of  the  transfer.  This 
fact  in  the  construction  of  the  Canal  will  be  appreciated  as  an 
element  of  tremendous  advantage  in  the  prosecution  of  the 
undertaking  and  has  been  an  important  factor  in  enabling  the 
United  States  to  reach  the  advanced  stage  of  construction 
which  its  energetic  officials  have  attained. 

VII. 

Permit  me  now  to  make  allusion  to  the  brief  continuance  of 
myself  aud  some  of  my  associates  in  the  Board  of  the  Panama 
Railroad  Company  after  the  consummation  of  the  purchase. 
Pursuant  to  the  authority  of  Congress,  the  responsibility 
of  this  great  affair  was  placed  in  the  hamls  of  the 
secretary  of  war,  acting  more  directly  through  the  Isthmian 
Canal  Commission.  The  affair  was  so  vast  and  the  experience 
which  had  been  acquired  by  the  officials  and  counsel  through 
their  many  years  previous  association  with  it  was  deemed  so 


1<) 

valuable  that  they  were  asked  to  continue  for  a  while  in  their 
respective  relations  and  give  the  Government  the  benefit 
thereof.  Pursuant  to  this  expressed  wish,  I  with  others  of 
the  old  board,  continued  as  director  and  my  firm  as  counsel  of 
the  Railroad  Company  until  April  1,  1907,  when  I  terminated 
every  relation  with  the  Compali}-. 

The  Panama  Government  had  invested  $1,000,000  in  the 
first  mortgage  bonds  of  the  Panama  Railroad  Company  and 
in  recognition  of  the  fact  that  it  was  the  largest  single  owner 
of  its  bonds,  and  in  token  of  friendliness  to  that  nation,  Mr. 
Obaldia,  then  Minister  at  Washington,  was  invited  by  this 
Government  to  a  seat  in  the  Board.  Nevertheless,  he,  with 
Mr.  Farnham,  retired  from  the  Board  when  I  did,  on  April  1, 
1907. 

Therefore,  the  statement  by  the  gentleman  from  Illinois 
that  myself,  Mr.  Obaldia  and  Mr.  Farnham  are  members  of 
the  Panama  Railroad  Company,  or  that  either  of  us  has  since 
April  1,  1907,  had  any  ofiicial  or  professional  relations  to  the 
Company  is  untrue  as  the  records  of  the  Company  and  of  the 
Government  will  instantly  leveal. 

VIII. 

The  speech  referred  to  is  so  full  of  untrue  statements  that 
it  is  difficult  to  follow  them  all,  but  among  them  I  note  the 
statement  that  while  I  was  counsel  for  the  Panama  Railroad 
Company  I  acted  as  counsel  for  the  Transcontinental  Railroad 
under  Mr.  Harriman's  control.     This  also  is  untrue. 

I  have  thus  disposed  of  every  material  criticism  or  state- 
ment made  on  the  floor  of  the  House  concerning  the  acquisition 
by  the  Government  of  the  United  States  of  the  Canal  and 
Railroad  properties. 

IX. 

I  would  not  have  felt  ju^^tified  in  dealing  with  these  matters 
at  such  length  and  with  so  much  particularity  were  it  not  for 
the  fact  that  a  member  of  the  House  of  Representatives  has 
chosen  to  avail  of  his  privilege  as  a  member  of  that  distin- 
guished body  to  make  the  unwarrantable  and  false  statements 
to  which  I  have  referred.     By  reason  of  his  position  the  state- 


20 

ments  thus  made  by  him  have  received  a  currency  aud  a  pub- 
licity which  otherwise  would  have  been  impossible.  They 
have  appeared  in  the  records  of  Congress,  have  been  circulated 
through  the  press  throughout  the  country,  aud  although  in 
many  material  respects  categorically  denied  and  disapproved, 
have  in  effect,  been  reiterated  by  him  on  the  floor  of  the  House, 
Protected  as  he  is  by  his  constitutional  privilege,  there  is  no 
means  within  my  power  legally  to  call  him  to  an  account  for 
the  wrong  which  he  has  perpetrated.  Had  the  statements  been 
made  in  good  faith,  or  been  founded  upon  facts,  he  might 
plead  this  in  extenuation  of  the  wrong  committed  by  him. 
But  it  appears  from  what  I  have  said,  from  the  records  of 
Congress,  from  the  history  of  the  case,  and  from  the  indisput- 
able facts  that  not  a  single  statement  of  fact  made  by  him  was 
either  in  spirit  or  letter  justified  or  in  any  respect  consistent 
with  the  truth. 

No  course  is  left  me  as  a  self-respecting  citizen  but  to  brand 
his  statements  as  maliciously  false  aud  his  purpose  and  motive 
as  absolutely  nnw^orthy,  and  this  I  do  as  a  matter  of  justice  to 
the  President  of  Panama  aud  to  those  who  have  so  ably  and 
conscientiously  co-operated  iu  bringing  about  and  consum- 
mating this  great  undertaking,  as  w'ell  as  a  matter  of  justice 
to  me  and  to  the  modest  part  which  I  have  played  in  the 
Panama  Canal. 

Having  devoted  many  years  of  my  life  to  the  achieving  of 
this — the  greatest  work  of  mankind — and  having  done  so  with- 
out a  penny  of  gain  or  profit  of  any  kind  from  any  source, 
beyond  stricth'  professional  compensation ;  and  having  since 
the  acquisition  by  the  United  States  served  my  country  upon 
many  occasions  at  the  request  of  the  Executives,  without  the 
thought  of  reward,  prizing  more  than  all  else  their  official 
thanks  in  behalf  of  the  Government,  I  feel  that  I  am  entitled 
to  the  protection  of  the  House  of  Representatives  against  mis- 
representation, malice  and  slander  w'ithin  its  protected  walls. 

Very  respectfully  yours, 

Wm.  Nehon   Cromwell. 

Hon.  J.   Van  Yechten  Olcott, 

House  of  Bepreseniatives,  Washington. 


21 

Statement  of  Mr.  Crom-well,  December  11,  1008, 
Transmitted  to  Congress  by  the  President 
"Witli  His  Message  of  December  15,  1908,  and 
Referred  to  in  the  Foregoing  Letter. 

My  attention  lias  been  called  to  a  statement  issued  by  the 
editor  of  The  Indianapolis  News  in  which  he  attempts  to  reply 
to  the  charge  made  by  President  Roosevelt  that  certain  state- 
ments made  in  The  Indianapolis  News,  both  before  and  since 
the  recent  election  and  relating  to  the  purchase  of  the  Panama 
Canal  by  the  United  States  were  false  and  untrue. 

The  President  said  : 

"  The  News  gives  currency  to  the  charge  that  the  United 
States  bought  from  American  citizens  for  |40,0U0,000  property 
that  cost  these  citizens  only  $12,000,000.  The  statement  is 
false.  The  United  States  did  not  pay  a  cent  of  the  $40,000,000 
to  any  American  citizen,  etc." 

From  the  statement  issued  in  reply  by  the  editor  of  The 
News,  I  quote  the  following  : 

"  The  only  man  who  paid  any  attention  to  them  [that  is,  the 
criticisms  referred  to,  &,c.,\  was  Mr.  Charles  P.  Taft,  who  did 
deny  that  he  was  in  any  way  related  to  the  affair.  We  had  no 
word  from  the  President  or  Mr.  Taft.  The  other  men,  such  as 
Cromwell  and  Morgan,  who  were  believed  to  have  full  infor- 
mation in  regard  to  the  business,  said  nothing." 

And  he  attempts  to  justify  the  publication  of  the  false 
statements  appearing  in  his  paper  by  saying  that  they 

"  were  based  largely  on  statements  of  The  New  York  World, 
criticisms  which  were  made  over  and  over  again  during  the 
campaign,  and  were  utterly  ignored  until  to-day." 

The  reply  to  the  editor  of  The  News  furnishes  another 
proof  of  the  President's  characterizations,  for  in  the  very 
journal  under  whose  sheets  it  now  takes  refuge,  namely,  in 
The  New  York  World  of  Oct.  3,  1908,  appears  an  explicit  and 
unqualified  denial  by  me  of  the  storj-  referred  to  and  in  which 
I  used  the  following  language : 

"  We  may  expect  during  a  heated  political  contest  all  kinds 
of  stories,  which  are  not  worthy  of  notice,  but  this  one  I  wish  to 
denounce  in  the  strongest  terms  as  a  lying  fabrication  without 


22 

a  sbiidow  of  truth  in  it.  Neither  I  nor  any  one  allied  with  me^ 
either  directly  or  indirectlj',  at  any  time  or  in  any  place  in 
America  or  abroad,  ever  bought,  sold,  dealt  in,  or  ever  made  a 
penny  of  profit  out  of  any  stocks,  bonds,  or  other  securities  of 
either  the  old  Panama  Canal  Company  or  the  new  Panama 
Canal  Company  or  ever  received  for  the  same  a  single  dollar  of 
the  forty  millions  paid  by  the  United  States.  I  make  this  the 
most  sweeping  statement  that  language  can  conve}'. 

As  everybody  connected  with  the  affair  knows,  I  abstained 
from  receiving  the  forty  millions  in  my  own  hands  at  Wash- 
ington or  New  York  as  the  general  counsel  of  the  company, 
and  myself  arranged  for  the  payment  of  the  entire  forty  mill- 
ions direct  from  the  Treasury  of  the  United  States  through 
the  bankers  of  the  Government  into  the  Bank  of  France  at 
Paris  to  the  credit  of  the  liquidators  of  the  two  companies. 
There  it  remained  subject  to  the  order  of  the  liquidators  until 
distributed  by  them  to  the  hundreds  of  thousands  of  bene- 
ficiaries, and  not  one  dollar  of  it  ever  came  to  me  or  any  one 
in  any  wise  connected  with  me.  Of  course,  I  do  not  refer  to 
our  regular  compensation  as  counsel." 

I  wish  to  call  attention  to  the  fact  that  upon  the  first  day 
of  the  hearings  before  the  Committee  on  Interoceanic  Canals 
of  the  Senate  of  the  United  States  in  February,  1906,  I  volun- 
tarily made  an  explicit  and  detailed  statement  showing  how 
the  $40,000,000  was  paid  by  the  United  States  through  Messrs. 
J.  P.  Morgan  &  Co.  as  their  agents  to  the  Bank  of  France  at 
Paris  for  account  of  the  new  Panama  Canal  Company,  and  also 
explaining  Ihe  subsequent  payment  of  the  full  amount  to  the 
liquidators  of  the  New  Panama  Canal  Company  and  to  the 
liquidator  of  the  old  Panama  Canal  Company,  who  in  turn  dis- 
tributed the  same  to  their  respective  stock  and  bond  holders, 
numbering  hundreds  of  thousands  of  persons. 

I  further  submitted  to  the  Senate  committees  with  the 
permission  of  the  Panama  Government,  a  detailed  statement  of 
the  disposition  by  tlie  Kepublic  of  Panama  of  the  $10,000,000 
paid  by  the  United  States  to  Panama  in  1904,  accounting  for 
the  payment  of  the  whole  amount  and  showing  the  investments 
and  disposition  by  the  Panama  Government  of  every  dollar. 


Upon  the  same  public  inquiry  I  further  stated  with 
reference  to  the  proposed  Americanization  of  the  Panama 
Canal  Company  in  the  year  1899   and   the   proposed  formation 


23 

■of  a  syndicate  for  that  i)urpose  iu  that  year,  that  the  proposed 
plan  never  matured  into  anything.  It  was  never  consummated 
either  by  subscription  or  by  assent,  and  it  is  obsoh^to  and  an 
impracticable  thing — i)roved  so  to  be.  It  has  no  life  or  force 
of  being,  did  not  exist,  and  never  has  existed  and  is  as  dead  as 
a  door  nail. 

That  was  a  fruitless  suggestion  of  the  company,  which 
came  to  naught  and  under  which  I  acted  as  their  counsel 
solely. 

The  testimony  taken  by  the  Senate  Committee  is  a  public 
record  and  was  available  to  the  editors  of  The  News  and  The 
World,  and  had  either  of  them  been  as  interested  in  publish- 
ing the  truth  as  they  were  to  create  a  jiolitical  sensation,  they 
doubtless  would  have  taken  the  pains  to  have  published  the 
above  facts,  which  I  quote. 

I  again  denounce  the  statement  wherever  published  or  by 
wh'omsoever  made  that  there  was  a  sj-ndicate formed  by  Ameri-" 
nan  citizens  to  purchase  the  Panama  Canal  and  to  sell  it  to 
the  United  States  as  absolutely  and  unqualifiedly  false  and" 
untrue.  The  Americanization  plan  was  an  entiiely  different 
matter.  It  was  a  project  proposed  by  the  company  to  the 
Rivers  and  Harbors  Committee  of  the  House  and  to  President 
MrKinley  on  Feb.  27,  1899,  and  was  formally  authorized  by 
the  Board  of  Directors  Oct.  10,  1899,  subject  to  the  necessary 
approval  of  stockholders. 

The  initial  steps  were  taken  by  me  in  October,  Novem- 
ber, and  December,  1899,  and  a  company  formed  for  the  pur- 
pose under  the  laws  of  New  Jersey  for  carrying  out  the  in- 
structions of  my  client.  While  the  certificate  of  incorporation 
of  the  Panama  Canal  C(jmpany  of  America  was  tiled  in  New 
Jersey,  no  capital  stock,  except  the  nominal  capital  of  $5,000 
set  forth  in  the  certificate  of  incorporation  was  ever  issued  and 
nothing  further  was  ever  done  by  that  company,  as  the  records 
in  the  office  of  the  Secretary  of  State  of  New  Jersey  will  show. 

The  project  adopted  by  the  Board  of  Directors  failed  of 
approval  by  the  stockholders  in  December,  1899  ;  the  Board 
of  Directors  in  consequence  resigned  in  a  body,  and  the  plan 
then  and  there  forever  ended.  The  period  covered  by  this 
project  was  less  than  three  months;  not  a  dollar  was  paid  in 
under  it  nor  a  transaction  conducted  by  the  New  Jersey  com- 


24 

pany  for  the  reason  stated.  The  plan  was  dead  and  abandoned 
over  two  years  before  the  company  finally  yielded  to  the  pres- 
sure of  the  American  Government  to  sell  at  $40,000,000. 

Now,  with  regard  to  the  distribution  of  the  $40,000,000,^ 
it  has  been  made  to  appear  in  newspaper  comments  that  there 
was  some  mystery  connected  with  the  disposition  of  this 
money.  There  is  no  mystery  and  never  has  been.  The  fund 
in  question  paid  into  the  Bank  of  France  by  the  United  States 
produced  the  net  sum  of  200,000,000  francs,  the  sum  of  128,- 
000,000  francs  being  placed  to  the  credit  of  the  liquidator  of 
the  old  Panama  Canal  Company  and  77,400,000  francs  being 
placed  to  the  credit  of  the  new  Panama  Canal  Company  ia 
liquidation,  and  by  said  Bank  paid  over  to  said  liquidators, 
respectively,  pursuant  to  a  decision  of  arbitration  at  Paris 
Feb.  11,  1902,  confirmed  bv  the  Civil  Tribunal  of  the  Seine. 

To  the  Senate  Committee  I  stated  that  I  did  not  know 
what  distribution  of  the  fund  had  been  made,  and  that  I  was 
in  no  way  concerned,  or  interested  therein.  That  statement 
by  me  was  true.  I  had  no  pecuniary  interest  in  the  canal,  and 
it  was  none  of  my  business,  personally  or  professionally,  who 
were  the  stockholders  or  bondholders  of  the  company. 

Since  the  recent  publications  I  have  made  inquiries  in 
Paris  and  am  informed  that  the  distribution  of  these  moneys 
is  a  matter  of  public  record  ;  that  the  amount  received  by  the 
liquidator  of  the  old  Panama  Canal  Company  has  been  dis- 
tributed by  him  as  an  ofKcer  of  the  court  to  the  holders  of  the 
obligations  of  the  old  company  ;  that  these  persons  appeared 
in  person  at  the  office  of  the  liquidator  to  receipt  for  the 
moneys  paid  to  them  ;  that  they  numbered  226,296,  the  largest 
number  of  individuals  probably  ever  appearing  in  person 
upon  a  single  business  affair,  and  that  the  average  amount 
paid  was  $156. 

The  complete  and  detailed  record  of  these  payments,  to- 
gether with  the  name  and  receipt  of  every  person  to  whom 
payment  was  made  and  the  amount  of  such  payment,  is  in  the 
hands  of  the  liquidator  at  his  offices,  at  50  Eue  Etienne  Mar- 
cel, Paris,  which  is  in  a  prominent  and  frequented  part  of  the 
city,  near  the  Bourse,  easily  found  by  anyone  desirous  of 
doing  so. 


25 

As  to  the  fund  paid  to  the  new  Panama  Canal  Company, 
that  company  at  the  time  of  the  sale  of  its  property  to  the 
United  States  went  into  liquidation,  and  I  am  likewise  recently 
informed  that  the  distribution  of  its  assets  among  its  share- 
holders was  made  through  four  leading  banks  of  Paris,  the 
Credit  Lyonnais  Hoci^te  Generale,  Coraptoir  National  d'Es- 
compte  de  Paris,  and  Cr<5dit  Indnstriel  et  Commerciel,  in 
three  separate  payments,  (July  15,  1904  ;  Feb.  3.  1908,  and 
June  15,  190s),  covering  a  period  of  four  years,  and  was  com- 
pleted in  June,  1908.  This  liquidation  took  place  at  the  regu- 
lar offices  of  the  company,  19  Rue  Louis  le  Grand,  Paris, 
readily  found  by  anybody  who  honestly  sought  to  find 
them. 

The  facts  concerning  the  liquidation  are  a  matter  of  pub- 
lic report  to  the  shareholders  of  the  company,  (this  company 
had  no  bond  issues),  and  were  the  subject  of  official  publica- 
tions ftom  time  to  time,  covering  a  period  of  four  years  in  the 
offiicial  papers  under  direction  of  the  courts.  The  amount  so 
paid  to  the  shareholders  of  the  New  Panama  Canal  Com- 
pany, as  I  am  informed  by  the  liquidators,  is  approximately 
129. 78f.  on  each  share  of  the  j)ar  value  of  lOOf.,  that  is,  they 
merely  received  back  only  the  capital  originally  invested,  with 
interest,  less  than  3  per  cent,  per  aunum.  I  am  informed  by 
the  liquidators  that  the  shareholders  to  whom  distribution  was 
made  numbered  6,796. 

Neither  I  nor  my  law  firm  nor  any  one  connected  Avith 
me  ever  owned,  directly  or  indirectly,  any  share  of  stock  in 
the  new  Panama  Canal  Company,  nor  any  of  the  obligations 
or  securities  of  the  old  Panama  Canal  Company,  nor  ever 
bought  or  sold  any  of  the  shares  or  securities  of  either  one 
of  said  companies,  nor  were  directly  or  indirectly  interested  in 
them. 

I  am  also  positive  that  not  a  man  in  public  life  in 
America,  in  or  out  of  Congress,  ever  had  the  least  pecuniary 
interest  in  the  Panama  Canal. 

I  do  not  know  and  never  have  known  of  any  American 
citizen  who  has  ever  dealt  in  any  of  the  shares  of  the  new 
Panama  Canal  Company  or  the  shares  or  bonds  of  the  old 
company. 


26 

A  further  iustance  of  the  unwarranted  attitude  of  The 
Indianapolis  News  and  of  other  jourmily  repeating  the  state- 
ments is  furnished  with  resi3ect  to  Mr.  C.  P.  Taft  and  Mr. 
Douglas  Robinson.  In  the  same  issue  of  The  World  (Oct.  3, 
1908)  I  said  : 

"  The  mention  of  the  names  of  Mr.  Taft  and  Mr.  Douglas 
Robinson  is  another  evidence  that  this  is  a  fake  story.  No 
member  of  the  Taft  family  or  Mr.  Douglas  Robinson  ever  had 
the  remotest  connection  with  Panama  Canal  matters  directly 
or  indirectly,  and  I  never  saw  one  of  them  on  this  subject 
before  the  United  States  acquired  the  canal.  I  never  saw  Mr. 
Douglas  Robinson  in  my  life.  The  names  of  Caesar  and  Napo- 
leon might  as  well  have  been  used,  for  it  could  not  be  more 
impossible.  All  this  except  the  dragging  in  of  new  names  was 
thrashed  out  before  the  United  States  Senate  Committee  by 
the  bite  Senator  Morgan. 

"  Out  of  respect  for  the  dead  I  refrain  from  comment  upon 
that  proceeding,  but  I  feel  warranted  in  saying  that  it  was  pur- 
sued with  unparalleled  energy  and  skill.  It  was,  however, 
conipletely  exploded  and  refuted  by  the  facts  in  the  case,  and 
endeil  in  complete  discomhtuie.  There  is  not  a  word  of  truth 
in  it,  and  T  would  not  notice  it  at  this  time  if  it  did  not  con- 
cern others." 


The  introduction  of  these  gentlemen  iu  the  Panama  affairs 
is  like  the  creation  of  a  character  in  a  work  of  fiction.  They 
did  not  exist  in  the  sense  of  having  any  relation  to  the  canal 
matter.  Neither  of  them  ever  had  the  least  pecuniary  interest 
in  the  business.  It  is  a  matter  of  public  history  that  the 
President-elect  never  had  any  official  connection  with  the  canal 
until  months  after  it  had  been  acquired  by  this  Government. 
He  was  in  the  Philippines  as  Governor  during  all  the  years  in 
question. 

Equally  perverted  is  the  fact  concerning  the  records  and 
accounts  of  the  two  companies.  They  were  not  delivered  to 
the  United  States,  because  they  were  records  of  the  companies' 
transactions  with  which  the  United  States  had  no  concern. 
But  as  a  matter  of  fact  the  records  and  files  of  the  liquidation 
of  the  old  company  are  in  the  hands  of  the  liquidator  at  50 
Rue  Etienne  Marcel,  Paris,  and  those  of  the  new  company  were, 
on  the  final  payment  in  June,  1908,  deposited  with  the  Credit 


27 

Lyoanais,  Boulevard  des  Italiens,  to  be  preserved,  in  accord- 
ance with  French  custom,  for  a  period  of  twenty  years.  That 
corporation  has  the  custody  of  the  records,  as  is  well  known 
to  all  parties  in  interest. 

The  whole  story  of  Americans  or  some  American  syndi- 
cate buying  up  the  Panama  Canal  securities  at  a  low  price,  or 
at  any  price,  and  then  turning  them  in  upon  liquidation  at  a 
profit,  is  a  fiction  and  a  concoction.  The  money  of  tlie  United 
States  went  to  France,  and  was  distributed  to  the  hundreds  of 
thousands  of  foreign  owners,  none  of  whom,  so  far  as  I  know, 
were  Americans. 


[1553] 


UNIVERSITY  OF  CALIFORNIA  LIBRARY 

Los  Angeles 

This  book  is  DUE  on  the  last  date  stamped  below. 

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•  <■<<  'iiii  Jlir  l|[ll  IIMI  lllll     li'li  I    IIIIII 

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